* Hmm…
Yeah, I’m really wondering what happens if she uses that sort of framing during a legislative committee hearing.
* From the transcript…
Mark Maxwell:
“Last week we heard from John Bouman, the head of the — formerly with the Shriver Center on Poverty Law — who now heads up a ballot initiative committee trying to persuade voters to ‘Vote Yes for the Fair Tax.’ That’s what their ballot initiative is called. Of course, it refers to the graduated income tax rate structure that would require Illinois to abolish the flat tax we have in place embedded in our Constitution right now. This week, we hear the counter argument from Cindy Neal, who was the chair of the Leadership Council for the NFIB, the National Federation of Independent Business and a business owner in Peoria helping recruit employees and find them jobs in that area. Cindy, it’s good to have you with us.”
Cindy Neal 3:03
Thank you. Thank you, Mark.
Mark Maxwell 3:05
You were at that big press conference that coordinated statewide push a week ago trying to persuade voters of the downside of this. From your vantage point, is there something fundamentally unfair with a graduated income tax rate structure? For example, should the federal government change from where they are now to a flat income tax?
Cindy Neal 3:31
I would love to see the federal government change to a flat income tax. I think that that is what a fair tax is all about. If you pay, if everybody pays the same percentage on your income, I don’t know what could be more fair than that. So if you’re a multimillionaire versus someone who’s at entry level, I think that’s fair and it mathematically is beautiful and perfect.
Mark Maxwell 3:53
It’s a round number. It’s a clean number, but there’s also the reality that the supporters of this graduated income tax — one that has been, you know, in our federal system for decades now — they point out that the people who only make 20 or $30,000 a year, once they pay their taxes and their mortgage and their rent and all that, they live paycheck to paycheck, and they have very little left over. Someone who makes $250,000 a year or a million dollars a year pays their taxes and their mortgage and they have this much bigger chunk of the pie leftover. They have more disposable income. Is that not fair for people who are doing quite well for themselves in this system to kick in a little more to the systems that they take advantage of?
Cindy Neal 4:36
You know, I think that the people that are in those higher income brackets tend to be who I call the makers, and the folks that are in the lower income brackets tend to be what I call the takers. And I do believe that as somebody starting out in life and trying to raise your family, sometimes you need help from different programs and agencies and that’s why we all pay into our tax system to help those folks. But I don’t want to take away from the makers or make them pay more because those are the folks technically, that are reinvesting in businesses, providing employment opportunities for those people that are working their way up the career ladder and are trying to support their families locally.
Mark Maxwell 5:16
I don’t know if Abraham Lincoln would have used some of that same phrase, he often referred to a labor of being worthy of their of the spoils of their labor. You’re calling them takers. These are people who work their way through life.
Cindy Neal 5:29
No, I no… I wouldn’t necessarily I… Takers because they are still needing assistance. So, maybe that’s not the greatest terminology, but it rhymes with makers. So, there are people that make opportunities for others as far as in their business. And normally the folks that are in the higher income brackets, turn around and reinvest that money in new capital equipment, hiring more workers in
Mark Maxwell 5:51
Or their bigger house or their yacht, or a boat.
Cindy Neal 5:56
Sure. As you alluded to Lincoln, why not enjoy the spoils of your labors?
Discuss.
…Adding… React…
“The so-called low income ‘takers’ are the 97% of Illinoisans, many of whom are our nurses, teachers, grocery store clerks and other essential workers, who have been unfairly carrying the tax burden in our state for far too long. The Fair Tax is our chance to finally set things right,” said Quentin Fulks, Chairman of Vote Yes For Fairness. “Cindy Neal and opponents of the Fair Tax are only out to protect the millionaires and billionaires who benefit from our current broken system: one that enables the wealthy, so-called ‘makers’ to get away without paying their fair share. This attack on low-income Illinoisans coming from someone who two weeks ago claimed to be part of a ‘grassroots’ organization opposing the Fair Tax is not only despicable, it’s pure hypocrisy.”
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* Press release from Mayor Lori Lightfoot…
The conduct admitted to by ComEd in the Deferred Prosecution Agreement unveiled today is deeply disturbing. The Department of Justice is appropriately holding ComEd accountable for their criminal conduct. As a significant vendor for the City of Chicago, ComEd must also be accountable to the taxpayers and residents of Chicago. As Mayor, I have made transparency, reform and accountability pillars of my administration. And, as a former federal prosecutor myself, I know the thorough and meticulous work that goes into the scale of this kind of investigation and this type of agreement.
As a City, we are committed to ensuring that all Chicagoans can access high quality, reliable services at rates that are affordable for all our residents, particularly our most vulnerable. It is also critical that consumer voices are heard in response to today’s announcement, which is why the Committee on Environmental Protection and Energy will hold a public hearing on July 30th to hear directly from ComEd leadership as well as from residents. Chicagoans deserve fairness and transparency from all who are paid with taxpayer dollars, and my administration will do everything in our power to ensure that expectation is a reality.
*** UPDATE *** Hmm…
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* Here we go…
US Attorney John Lausch is speaking to the media right now. Click here to watch. I’ll update if necessary.
…Adding… Lausch…
Our federal investigations of corruption in Illinois are ongoing. We’ve got a lot of work ahead of us, and we will get that work done.
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* Gov. Pritzker said this at the end of his prepared remarks today about today’s ComEd stories…
I have read several of the articles today. And I am deeply troubled and frankly, I’m furious with what is being reported.
The speaker has a lot he needs to answer for, to authorities, to investigators and most importantly to the people of Illinois.
These allegations strike at the core of what public service means. It’s a high calling, public service. It’s a high calling, one in which we serve with a sacred trust to put the people first.
If these allegations of wrongdoing by the speaker are true, there is no question that he will have betrayed the public trust and he must resign, therefore.
In the meantime, I urge the speaker to fully cooperate with the investigation and answer all questions as quickly as possible.
I’ll update with any responses to questions.
…Adding… He was asked about the other story today regarding his property taxes…
There’s nothing new to tell you. I learned about this from a reporter. The facts about this matter have been public for some time and they’ve extensively been discussed as they were in the 2018 election, and they’ve been fully aired. And as I’ve always said, any review will show that all the rules were followed, but I’ve not been contacted by federal authorities nor has my wife.
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* Press release…
Exelon Corp. and its ComEd subsidiary today announced that ComEd has entered into an agreement with the U.S. Attorney’s Office for the Northern District of Illinois to resolve the previously disclosed investigation into ComEd’s historical lobbying practices in Illinois. The resolution ends the investigation into ComEd by the Department of Justice (DOJ).
Exelon CEO Christopher M. Crane said, “We are committed to maintaining the highest standards of integrity and ethical behavior. In the past, some of ComEd’s lobbying practices and interactions with public officials did not live up to that commitment. When we learned about the inappropriate conduct, we acted swiftly to investigate. We concluded from the investigation that a small number of senior ComEd employees and outside contractors orchestrated this misconduct, and they no longer work for the company. Since then, we have taken robust action to aggressively identify and address deficiencies, including enhancing our compliance governance and our lobbying policies to prevent this type of conduct. We apologize for the past conduct that didn’t live up to our own values, and we will ensure this cannot happen again.”
Under the three-year deferred prosecution agreement, ComEd has agreed to make payments totaling $200 million, and has agreed to the government’s filing of a single charge that will be dismissed at the end of the three-year term, provided it abides by all terms of the agreement. The fine will not be recovered in rates or charged to customers. The conduct at issue in the agreement relates only to ComEd, and the agreement does not contain any allegation of misconduct by Exelon or Exelon Generation. The agreement resolves the government’s investigation into both ComEd and Exelon. The related Securities and Exchange Commission investigation and civil lawsuits remain pending.
ComEd fully and substantially cooperated with the U.S. Attorney’s Office from the beginning of the investigation, and since that time, has taken extensive remedial measures. ComEd’s remediation and cooperation efforts were acknowledged specifically by the government in the resolution agreement.
As part of its remediation, Exelon implemented four new mandatory policies that apply to employees who interact with public officials. These policies lay out specific rules, procedures and tracking mechanisms governing 1) interactions with public officials; 2) vetting and monitoring of lobbyists and political consultants; 3) employment referrals or requests from public officials; and 4) vendor referrals or requests from public officials.
The policies also prohibit subcontracting of third-party lobbyists and political consultants, and hiring of such firms includes oversight from the company’s ethics and compliance team, led by David Glockner, Exelon’s executive vice president of Compliance and Audit. Glockner was appointed to his role in March 2020 after having previously served as a senior Securities and Exchange Commission official and chief of the Criminal Division in the U.S. Attorney’s Office for the Northern District of Illinois, among other roles.
In addition, the company is conducting training on the new policies for employees as well as lobbying and political consulting partners. While the misconduct was limited to ComEd, the policies apply across all Exelon subsidiaries in Illinois and all other jurisdictions where Exelon operates, and are available on the company website.
Exelon and its operating companies are dedicated to providing customers and communities with clean, reliable, low-cost energy at the highest levels of service, efficiency and operational performance.
*** UPDATE 1 *** Illinois PIRG Director Abe Scarr…
Today’s filing confirms what we have long suspected and feared: that ComEd and its parent company Exelon’s remarkable public policy success since 2011 was made possible through a corrupt and illegal political influence operation.
It is important to remember that ComEd was in crisis in the decade leading up the passage of the Energy Infrastructure Modernization Act (EIMA) in 2011. Its distribution system suffered from chronic reliability problems stemming from decades of mismanagement. ComEd was in a financially and politically precarious position, threatening bankruptcy. Former Exelon CEO John Roe said Speaker Madigan was, through this time, a “foe.” ComEd’s political and financial fortunes then changed dramatically, starting with the passage of EIMA in 2011.
EIMA, followed by a trailer bill in 2013, radically changed utility regulation in Illinois, guaranteeing utility profits through so-called “formula” rate making, and reducing the Illinois Commerce Commission to a rubber stamp for company profits. Through EIMA and follow up legislation, ComEd’s annual authorized profits have grown by 47 percent between 2011 to 2019, when they reached over $739 million.
While the actions of federal prosecutors may deliver a legal remedy for ComEd’s criminal actions, it will not address the public policy harms this corruption wrought. The Illinois General Assembly must act to right the wrongs of the past decade, including revoking formula rates, reducing utilities’ ability to influence public policy through political contributions, lobbying and rate-payer funded charitable giving, and addressing the damaging conflicts of interest inherent to Exelon’s ownership of ComEd.
*** UPDATE 2 *** Crain’s has the response from a spokesperson for former ComEd CEO Anne Pramaggiore…
“Ms. Pramaggiore has done nothing wrong and any inference to the contrary is misguided and false. The fact is she led a distinguished career at Exelon, helping guide the company to high levels of reliability and record levels of customer satisfaction while implementing successful programs to improve utility infrastructure. During her tenure, she and other current and former ComEd and Exelon executives received, evaluated and granted many requests to provide appropriate and valuable services to the companies, none of which constitute unlawful activity.”
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* Press release…
This morning, the U.S. Attorney’s Office of the Northern District of Illinois announced that after a years long federal investigation into a widespread bribery scheme, ComEd has agreed to pay $200 million to resolve the case. In their release, the U.S. The Attorney’s Office stated that “ComEd Admits Arranging Jobs and Contracts for Political Allies of High-Level State of Illinois Official.”
That high-level State of Illinois Official is none other than Speaker Mike Madigan.
Illinois Republican Party Chairman Tim Schneider released the following statement in response to today’s news along with the ongoing federal investigation into Governor JB Pritzker:
“The people of Illinois now live in a state where both the Speaker of the House and the Governor are under criminal investigation. Even for a state with a history of corruption, this is unprecedented. Crimes of bribery and tax fraud cannot be tolerated from our elected officials. As we learn more about the bribery investigation into Speaker Madigan and the property tax fraud investigation into Governor Pritzker, our hearts go out to the people of Illinois who are once again left yearning for elected leaders who work for them, not for themselves. The Democratic culture of corruption in Illinois must come to an end.”
*** UPDATE 1 *** From the GOP delegation…
Congressmen Rodney Davis (IL-13), Darin LaHood (IL-18), John Shimkus (IL-15), Adam Kinzinger (IL-16), and Mike Bost (IL-12) released the following statement regarding the unprecedented developments in ongoing federal criminal investigations of Speaker Michael Madigan and Governor J.B. Pritzker:
“Illinoisans are sadly no strangers to corruption in our state’s politics, but simultaneous federal criminal investigations into both the Speaker of the House and the Governor are truly unprecedented. Today’s developments in the ongoing bribery investigation against Speaker Madigan and the property tax fraud investigation against Governor Pritzker are disturbing. We fully support U.S. Attorney John Lausch and other federal officials in their important work to bring those who violate the public’s trust to justice. The people of Illinois deserve better than Illinois Democrats’ embarrassing, systemic corruption.”
…Adding… Press release…
Illinois Rising Action executive director Kayleen Carlson released the following statement in response to the ongoing federal investigations of Governor JB Pritzker and Speaker Mike Madigan:
“For too long, corruption has been the calling card for government and politics in Illinois. Today it’s more of the same with the news that Speaker Mike Madigan is under federal investigation for bribery and Governor JB Pritzker is under investigation for property tax fraud. The people of Illinois have once again been betrayed by elected leaders at the top of the Illinois Democratic Party. These investigations should serve as yet another reminder that corruption is still running rampant and that Illinois Democrats are only interested in serving themselves, and not the people they were elected to represent.”
…Adding… Another one from the ILGOP…
Illinois Republican Party Chairman Tim Schneider has released a statement following the separate press conferences of Governor Pritzker and U.S. Attorney Lausch:
“Based on the evidence presented today by the United States Attorney’s Office, and in the context of months of revelations about the federal investigation into Speaker Michael Madigan and his closest associates, we believe it’s time for Speaker Madigan to do the right thing for Illinois and resign his office.
Governor Pritzker’s refusal to make such a clear statement may have to do with his own federal investigation into property tax fraud. Perhaps he is concerned that calling on Speaker Madigan to resign will lead to calls for his own resignation. We cannot discern when Governor Pritzker thinks Speaker Madigan should resign: next week, only when he’s indicted or only after he’s been convicted. Nor can we discern whether Governor Pritzker will commit to resigning should the allegations against him bear truth.
The people of Illinois cannot afford this scandal to drag on for months and years. Speaker Madigan should spare the citizens of Illinois by resigning immediately. Should the federal probe of Governor Pritzker’s property tax fraud continue to escalate, we would expect him to do the same.”
Rep. Batinick…
With Federal Prosecutors filing federal bribery charges against Commonwealth Edison Company (“ComEd”) and implicating Illinois House Speaker Mike Madigan, State Representative Mark Batinick (R-Plainfield) is renewing his call for Madigan to resign and demanding lawmakers return to Springfield to pass comprehensive ethics reform.
Today’s charges come after a yearlong corruption investigation into state and local governments. ComEd has agreed to resolve the investigation through a deferred prosecution agreement with the U.S. Attorney’s office, which include paying a $200 million fine. Through that agreement ComEd, the largest electric utility company in Illinois, has admitted it arranged jobs, subcontracts and pay-offs for political associates of Mike Madigan.
“I was the first elected official to call for the Speaker to resign and that sentiment rings even truer today,” said Rep. Batinick. “If we are going to truly root out corruption in our system, it starts from the top down. Elected officials need to be held the most accountable and with today’s charges, it is clear that the time has come for the Speaker to answer to the people of Illinois.”
In 2016, Rep. Batinick worked tirelessly against a ComEd bailout bill, SB2814, which required a statewide rate hike to prevent the closure of two nuclear power plants in Illinois. The rate increase provided for in SB2814 was expected to generate more than $200 million a year over the next ten years, but was the key factor in the federal probe against ComEd. For Batinick, this bailout was nothing more than a politically-connected coalition of Energy Industry players rushing through a complicated bill to force electric rate increases throughout Illinois. In 2019, he filed legislation, HB3987, to eliminate the bailout, which was never called by the Speaker for consideration.
The Representative is calling for lawmakers to return to Springfield to work on a comprehensive ethics reform package. “As lawmakers, we need to get back to Springfield and adopt stronger ethics laws. While the sense of urgency to make this change has been lost on the majority party for far too long, today’s federal charges reinforce what the Republican caucus has been supporting for years: we need change in Illinois and it must come soon.”
An ethics reform package filed by the House Republicans last year was never given consideration in the House of Representatives. A list of that legislation is here.
*** UPDATE 2 *** Leader Durkin…
Illinois House Republican Leader Jim Durkin (R-Western Springs) released the following statement on the new information released from the ongoing federal corruption investigations:
“Earlier this week, I pushed to reform our broken political system in Illinois and once again, Speaker Madigan dismissed the need for ethics reform in Illinois. Today, we see why.
The announcement against ComEd and “Public Official A” and the ongoing investigation of Cook County Property tax corruption are another sad commentary on the state of our state. The deep federal investigations into the highest members of the Democratic Party and their abuse of the Cook County property tax system is finally coming to light.
For too long, one man, Speaker Madigan, has held so much power, and the old axiom holds true: power tends to corrupt, and absolute power corrupts absolutely.
The chance for ethics reform this session has been blocked. Any hope for real property tax reform has been stalled. The system has been rigged to benefit those in power, and to keep the Democratic Party in control while the citizens of Cook County and Illinois suffer.
Today, I hope, is a day of awakening for citizens of Illinois. We sit here in a bankrupt state, burdened by the actions, or in many cases inaction, of the Democratic Party of Illinois that through Speaker Madigan has held the reins of power for decades.
The allegations presented today are troubling and downright depressing. Speaker Madigan needs to “speak” up on this issue, and if the allegations are true, he needs to resign immediately. Just as important, I hope that members of the General Assembly in the majority party, the Democratic Party, have the courage to finally stand up and demand an explanation of their leader that they have for decades elected to rule.
The citizens of Illinois deserve so much better.”
*** UPDATE 3 *** Leader Brady…
The following is a statement by Senate Republican Leader Bill Brady.
“At the same time Illinois Democrats are pushing for a massive tax increase, residents are again confronted with Democratic corruption at the highest levels of their state government. If the allegations reported today against Speaker Madigan turn out to be true, then he should resign.”
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* Let’s take a look at ComEd’s deferred prosecution agreement, starting with this section entitled “Hiring of Public Official A’s [Speaker Madigan’s] Associates as Vendor ‘Subcontractors’ Who Performed Little or No Work for ComEd”…
Beginning no later than in or around 2011, Public Official A and Individual A sought to obtain from ComEd jobs, vendor subcontracts, and monetary payments associated with those jobs and subcontracts for various associates of Public Official A, such as precinct captains who operated within Public Official A’s legislative district.
In or around 2011, Individual A and Lobbyist 1 developed a plan to direct money to two of Public Official A’s associates (“Associate 1” and “Associate 2”) by having ComEd pay them indirectly as subcontractors to Consultant 1. Payments to Associate 1 and Associate 2, as well as later payments to other subcontracted associates of Public Official A, continued until in or around 2019, even though those associates did little or no work during that period.
Consultant 1 agreed in 2011 that Public Official A’s associates would be identified as subcontractors under Consultant 1’s contract and that ComEd’s payments to Consultant 1 would be increased to cover payments to those subcontractors. Between in or around 2011 and 2019, Consultant 1 executed written contracts and submitted invoices to ComEd that made it falsely appear that the payments made to Company 1 were all in return for Consultant 1’s advice on “legislative issues” and “legislative risk management activities,” and other similar matters, when in fact a portion of the compensation paid to Company 1 was intended for ultimate payment to Public Official A’s associates, who in fact did little or no work for ComEd. Consultant 1 and Company 1 did little, if anything, to direct or supervise the activities of Public Official A’s associates, even though they were subcontracted under and received payments through Company 1. Moreover, because they were paid indirectly through Company 1, the payments to Public Official A’s associates over the course of approximately eight years were not reflected in the vendor payment system used by ComEd, and as a result, despite that Public Official A’s associates were subcontracted under and receiving payments through Company 1, no such payments were identifiable in ComEd’s vendor payment system.
Certain senior executives and agents of ComEd were aware of these payments from their inception until they were discontinued in or around 2019. For example, in or around May 2018, Public Official A, through Individual A, asked CEO-1 to hire a political ally of Public Official A who was retiring from the Chicago City Council at the end of the month (“Associate 3”).
Public Official A, we know, is Speaker Madigan. The alderman who retired in 2018 was likely Michael Zalewski. Could “Consultant 1″ be this guy?…
For example, the previously unreported records show ComEd paid Jay D. Doherty and Associates $3,104,250 between 2011 and 2018. That amount is almost six times greater than the roughly $530,000 he disclosed being paid by ComEd in lobbyist disclosures filed with the city of Chicago. In federal filings, ComEd vaguely listed Doherty’s work only as “business consulting.” […]
WBEZ has reported that investigators are looking into whether Doherty served as a “pass through” for ComEd’s under-the-radar deals with politically connected individuals and companies, some of whom are suspected of doing little or no work.
* Those alleged pass-through payments to Consultant 1 explained…
Certain senior executives and agents of ComEd were also aware of the purpose of these payments to Public Official A’s associates, namely, that they were intended to influence and reward Public Official A in connection with Public Official A’s official duties and to advance ComEd’s business interests.
The feds don’t come right out and say it, but they’re all but alleging bribery here.
* “Individual A” looks to my eyes to be Mike McClain…
On or about May 16, 2018, Individual A explained to Senior Executive 1 why certain individuals were being paid indirectly through Company 1, by making reference to their utility to Public Official A’s political operation. Individual A identified Associate 1, one of the several individuals on Company 1’s payroll, as “one of the top three precinct captains” who also “trains people how to go door to door . . . so just to give you an idea how important the guy is.” […]
On or about February 11, 2019, Individual A had a conversation with Lobbyist 1, who by that time had retired from ComEd, but had continued to serve as a paid external lobbyist to ComEd. In discussing how the renewal of Company 1’s contract—which included significant payments to Company 1 to account for indirect payments to Public Official A’s associates—should be communicated internally, Individual A said, “We had to hire these guys because [Public Official A] came to us. It’s just that simple.” Lobbyist 1 agreed, and added, “It’s, it’s clean for all of us.”
Lobbyist 1, in my opinion, looks like John Hooker.
* Here’s where the alleged quid pro quo comes in…
Consultant 1 emphasized that he had told no one of the arrangement per instructions previously given to Consultant 1, and cautioned Senior Executive 1 that ComEd should not tamper with the arrangement because “your money comes from Springfield,” and that Consultant 1 had “every reason to believe” that Individual A had spoken to Public Official A about the retention of Public Official A’s associates, and knew Lobbyist 1 had done so Consultant 1 added that Public Official A’s associates “keep their mouth shut, and, you know, so. But, do they do anything for me on a day to day basis? No.” Consultant 1 explained that these payments were made “to keep [Public Official A] happy, I think it’s worth it, because you’d hear otherwise.”
* More…
On or about March 5, 2019, Individual A and ComEd personnel participated in a meeting during which they discussed Company 1’s contract and why the indirect payments to Public Official A’s associates made under the guise of that contract should be continued for another year. During that meeting, Individual A explained that for decades, Public Official A had named individuals to be ComEd employees, such as meter readers, as part of an “old-fashioned patronage system.” In response, a ComEd employee acknowledged that such hires could be a “chip” used by ComEd. ComEd renewed Company 1’s contract.
* We know that the feds were listening to McClain’s phone calls. This looks like an example…
On or about March 6, 2019, Individual A and Lobbyist 1 discussed the renewal of Company 1’s contract. During the conversation, Lobbyist 1 explained that “with the [Consultant 1] stuff, you got a little leg up,” to which Individual A agreed. Lobbyist 1 later added, “I mean it’s uh, unmentioned, but you know, that which is understood need not be mentioned.” Individual A responded, “Right. Exactly. Exactly.”
* From the section entitled “Appointment of Board Member 1 as Member of the Board of Directors at the Request of Public Official A”…
Beginning in or around 2017, Public Official A sought the appointment of an associate to the ComEd Board of Directors (hereinafter referred to as “Board Member 1”). Public Official A’s request was communicated by Individual A to CEO-1. In or around May 2018, in response to internal company opposition to the appointment of Board Member 1, CEO-1 asked Individual A if Public Official A would be satisfied if CEO-1 arranged for Board Member 1 to receive a part-time job that paid an equivalent amount of money to a board member position, namely, $78,000 a year. Individual A told CEO-1 that Public Official A would appreciate if CEO-1 would “keep pressing” for the appointment of Board Member 1, and CEO-1 agreed to do so. In or around September 2018, CEO-1 (who by this time had been promoted to an executive position within Exelon Utilities, in which capacity CEO-1 maintained oversight authority over ComEd) assured Individual A that CEO-1 was continuing to advocate for the appointment of Board Member 1 made at Public Official A’s request because “You take good care of me and so does our friend [Public Official A] and I will do the best that I can to, to take care of you.”
On or about April 25, 2019, CEO-1 advised Individual A by text message, “Just sent out Board approval to appoint [Board Member 1] to ComEd Board.” The following day, April 26, 2019, ComEd filed a notice with the United States Securities and Exchange Commission stating that Board Member 1 had served as a director of ComEd since April 2019. Although ComEd and Exelon conducted due diligence on Board Member 1 and ultimately determined he was qualified for a Board position, no one at ComEd or Exelon recruited Board Member 1 to serve as a director, and ComEd did not interview or vet other outside candidates for the vacant board seat. ComEd appointed Board Member 1, in part, with the intent to influence and reward Public Official A in connection with Public Official A’s official duties.
Whoa. Legal or not, that’s brazen.
…Adding… From an SEC filing under “Election of Directors”…
Juan Ochoa, Age 48. Mr. Ochoa has served as a Director of ComEd since April 2019.
* “Retention of Law Firm A”…
In or around 2011, ComEd agreed to retain Law Firm A, and entered into a contract pursuant to which ComEd agreed to provide Law Firm A with a minimum of 850 hours of attorney work per year. This contract was entered into with Law Firm A, in part, with the intent to influence and reward Public Official A in connection with Public Official A’s official duties and because personnel and agents of ComEd understood that giving this contract to Law Firm A was important to Public Official A. In 2016, Law Firm A’s contract was up for renewal. As part of renewal discussions, personnel within ComEd sought to reduce the hours of legal work they provided to Law Firm A from the 850 hours specified in the 2011 retention agreement because ComEd paid only for hours worked and there was not enough appropriate legal work to give to Law Firm A to fill 850 annual hours.
Thereafter, an attorney associated with Law Firm A [Lawyer A] complained to Individual A about ComEd’s effort to reduce the amount of work provided to Law Firm A. On or about January 20, 2016, Individual A contacted CEO-1 and wrote, “I am sure you know how valuable [Lawyer A] is to our Friend [Public Official A],” and then went on to write, “I know the drill and so do you. If you do not get involve [sic] and resolve this issue of 850 hours for his law firm per year then he will go to our Friend [Public Official A]. Our Friend [Public Official A] will call me and then I will call you. Is this a drill we must go through?” CEO-1 replied in writing, “Sorry. No one informed me. I am on this.” Thereafter, CEO-1 tasked a ComEd employee, who was assigned as a “project manager” to assist with the project of obtaining legislative approval of FEJA, to ensure that Law Firm A’s contract was renewed. The project manager had no oversight authority over ComEd’s legal department and was not otherwise involved in deciding what legal professionals the legal department retained. The project manager was assigned the task of ensuring Law Firm A’s contract was renewed because the work provided to Law Firm A was, in part, designed to influence and reward Public Official A in connection with Public Official A’s official duties, including the promotion and passage of FEJA. ComEd agreed in or around June 2016 to renew Law Firm A’s contract with substantially reduced annual hours.
* “Internship Program”…
Beginning no later than 2013, and continuing until in or around 2019, ComEd operated an internship program. As part of the program, ComEd would accept a specified target number of students who primarily resided in a Chicago ward that Public Official A was associated with (“Public Official A’s Ward”) and that were recommended to ComEd by associates of Public Official A, including Individual A. ComEd hired students from Public Official A’s Ward, in part, with the intent to influence and reward Public Official A in connection with Public Official A’s official duties.
* “Benefit to ComEd”…
Between in or around 2011 and in or around 2019, during the same time frame that ComEd was making payments to Public Official A’s associates, and extending other benefits for the purpose of influencing and rewarding Public Official A, ComEd was also seeking Public Official A’s support for legislation that was beneficial to ComEd, including EIMA and FEJA, that would ensure a continued favorable rate structure for ComEd. ComEd acknowledges that the reasonably foreseeable anticipated benefits to ComEd of such legislation exceeded $150,000,000.
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* This is one crazy day, campers. Here’s Tim Novak…
Federal prosecutors have made a series of requests to the Cook County assessor’s office over the past five months for records regarding the $330,000 property tax break that Gov. J.B. Pritzker got on a Gold Coast mansion — a break he got in part because the toilets were disconnected during a stalled remodeling job.
Records obtained by the Chicago Sun-Times show the U.S. attorney’s office in Chicago has asked Cook County Assessor Fritz Kaegi for all emails and any other communications dating to 2012 regarding the tax break that Kaegi’s predecessor, Joseph Berrios, gave Pritzker.
As they continue an investigation prompted by a Sun-Times report in May 2017, they have asked for information including the name of every employee who, under Berrios, “worked, reviewed and/or approved” the tax break for one of the two mansions Pritzker owns on North Astor Street. Pritzker reimbursed Cook County the full value of the tax break in 2018.
Rather than obtain those names through subpoenas, prosecutors sent Kaegi’s staff a series of emails beginning Jan. 17 that cited a wide range of specific records, which he has agreed to turn over, records show.
* Just a few of the other properties the feds were interested in…
• 1 N. LaSalle St., a Loop skyscraper owned by ONL Properties. Burke’s law firm filed eight appeals between 2010 and 2017. During that time, Berrios moved to drastically increase his estimation of the property’s value but backed down. That resulted in Burke getting more than $1.9 million in property savings for the owners. On top of that, he got them a tax refund of $101,951 last year when a Cook County judge agreed to lower the 2015 assessment, when the tax bill totaled $2,098,342. […]
• 730 Franklin Building, a commercial building at 300 W. Superior St., filed five appeals to Berrios’ office, at first using Madigan’s law firm and then switching to Flanagan last year. […]
• Gibson’s, 1028 N. Rush St., a steakhouse popular with Chicago’s movers and shakers, has long been represented by property tax attorney Michael Crane, whose nephew Christopher Crowley was Berrios’s chief of staff in the assessor’s office. […]
• Erie Cafe, 530 E. Erie St., a steakhouse where Berrios is among the clout-heavy regulars. It was also the site of his retirement party before he left office in December 2018.
Go read the whole thing.
…Adding… From the governor’s daily public schedule…
What: Gov. Pritzker to discuss local jobs supported by the Summer Youth Employment Program.
Where: Employee Connections, 2504 Washington Street, Waukegan
When: 12:00 p.m.
Watch live: https://www.Illinois.gov/LiveVideo
What: Gov. Pritzker to discuss the census and the importance of being counted.
Where: Hinkston Park, 810 Baldwin Avenue, Waukegan
When: 1:00 p.m.
Watch live: https://www.Illinois.gov/LiveVideo
Note: No additional media availability.
I’ve asked whether he’s still planning to do these events. I’ll let you know what I hear back.
*** UPDATE *** I’m told the schedule stands as is.
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* Sun-Times…
ComEd will pay $200 million to end a federal criminal investigation into a years-long bribery scheme, the U.S. Attorney’s office announced Friday.
In doing so, it is admitting it arranged jobs, subcontracts and pay-offs for associates of “a high-level elected official for the state of Illinois.” That person is identified as “Public Official A” in a news release that implicates House Speaker Michael Madigan.
“Public Official A controlled what measures were called for a vote in the Illinois House of Representatives and exerted substantial influence over fellow lawmakers concerning legislation affecting ComEd,” the U.S. Attorney’s office said in a news release.
ComEd is resolving the investigation through a deferred prosecution agreement that will include the $200 million fine, according to the feds.
* Press release…
Commonwealth Edison Company (“ComEd”), the largest electric utility in Illinois, has agreed to pay $200 million to resolve a federal criminal investigation into a years-long bribery scheme, the U.S. Attorney’s Office in Chicago announced today.
The criminal investigation of ComEd is being resolved with a deferred prosecution agreement under which ComEd admitted it arranged jobs, vendor subcontracts, and monetary payments associated with those jobs and subcontracts, for various associates of a high-level elected official for the state of Illinois, to influence and reward the official’s efforts to assist ComEd with respect to legislation concerning ComEd and its business. The U.S. Attorney’s Office today filed a one-count criminal information in U.S. District Court in Chicago charging ComEd with bribery. Under the agreement, the government will defer prosecution on the charge for three years and then seek to dismiss it if ComEd abides by certain conditions, including continuing to cooperate with ongoing investigations of individuals or other entities related to the conduct described in the bribery charge.
The deferred prosecution agreement, which is subject to approval by the U.S. District Court, requires ComEd to pay a $200 million fine. A court date for the approval hearing has not yet been scheduled.
The bribery charge and deferred prosecution agreement were announced by John R. Lausch, Jr., United States Attorney for the Northern District of Illinois; Emmerson Buie, Jr., Special Agent-in-Charge of the Chicago office of the FBI; and Kathy A. Enstrom, Special Agent-in-Charge of the IRS Criminal Investigation Division in Chicago. The government is represented by Assistant U.S. Attorneys Amarjeet S. Bhachu, Diane MacArthur, Timothy J. Chapman, Sarah E. Streicker, Matthew L. Kutcher, and Michelle Kramer.
In addition to the monetary penalty and obligation to continue cooperating with government investigations, ComEd’s obligations under the deferred prosecution agreement include enhancing its compliance program and providing annual reports to the government regarding remediation and implementation of its compliance measures. If ComEd fails to completely perform or fulfill each of its obligations under the agreement during the three-year term, the U.S. Attorney’s Office can initiate prosecution of the charged offense.
ComEd’s admissions regarding the charged conduct are contained in a Statement of Facts attached to the deferred prosecution agreement. ComEd admitted that its efforts to influence and reward the high-level elected official – identified in the Statement of Facts as “Public Official A” – began in or around 2011 and continued through in or around 2019. During that time, the Illinois General Assembly considered bills and passed legislation that had a substantial impact on ComEd’s operations and profitability, including legislation that affected the regulatory process used to determine the electricity rates ComEd charged its customers. Public Official A controlled what measures were called for a vote in the Illinois House of Representatives and exerted substantial influence over fellow lawmakers concerning legislation affecting ComEd. The company admitted that it arranged for jobs and vendor subcontracts for Public Official A’s political allies and workers even in instances where those people performed little or no work that they were purportedly hired by ComEd to perform.
In addition to the jobs and contracts, ComEd further admitted that it undertook other efforts to influence and reward Public Official A, including by appointing an individual to ComEd’s Board of Directors at the request of Public Official A; retaining a particular law firm at the request of Public Official A; and accepting into the company’s internship program a certain amount of students who resided in the Chicago ward where Public Official A was associated.
To date, ComEd has provided substantial cooperation with the federal investigations. Per the terms of the agreement, the company will continue to provide such cooperation until all investigations and prosecutions arising out of the charged conduct are concluded.
Click here for the ComEd Deferred Prosecution Agreement. Click here for the criminal information…
Public Official A was the Speaker of the House of Representatives and an elected member of that body. As Speaker of the House of Representatives, Public Official A was able to exercise control over what measures were called for a vote in the House of Representatives. Public Official A also exercised substantial influence and control over fellow lawmakers concerning legislation, including legislation affecting ComEd.
Beginning no later than in or around 2011, and continuing through in or around 2019, in the Northern District of Illinois, Eastern Division, and elsewhere,
COMMONWEALTH EDISON COMPANY,
defendant herein, corruptly gave, offered, and agreed to give things of value, namely, jobs, vendor subcontracts, and monetary payments associated with those jobs and subcontracts, for the benefit of Public Official A and Public Official A’s associates, with intent to influence and reward Public Official A, as an agent of the State of Illinois, a State government that during each of the twelve-month calendar years from 2011 to 2019, received federal benefits in excess of $10,000, in connection with any business, transaction, and series of transactions of $5,000 or more of the State of Illinois, namely, legislation affecting ComEd and its business;
In violation of Title 18, United States Code, Section 666(a)(2).
…Adding… Sounds like we’ll know more later today. Media advisory…
WHO: John R. Lausch, Jr., United States Attorney for the Northern District of Illinois
Emmerson Buie, Jr., Special Agent-in-Charge of the FBI Chicago Field Office
Kathy A. Enstrom, Special Agent-in-Charge of the Chicago Office of the IRS Criminal Investigation Division
WHAT: The officials will announce developments in a public corruption investigation.
WHERE: Enclosed courtyard of the Dirksen Federal Building, 219 S. Dearborn St., Chicago IL 60604
Media credentials and masks will be required to access the news conference.
WHEN: Friday, July 17, 2020, 12:30 p.m. CDT
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